Quiz | September 2014

Test Your Small Business Know-How

Starting your own small business may sound like a good deal. You can call the shots, set your own hours and eliminate long, pointless meetings. But how much do you know about getting started — and achieving financial success?

Or maybe you're already running your own show and all the challenges that come along with it.

Quiz

Test Your Small Business Know-How

There's a 50% chance your small business will not be around five years from now.

A. True
B. False

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Quiz

Test Your Small Business Know-How

Question 1 of 10

There's a 50% chance your small business will not be around five years from now.

You're right!A. True is correct.

Sorry, wrong! is incorrect.

The right answer is A. True.

According to the Small Business Administration, only half of new enterprises survive five years or more. It's best to know what you're up against when you're starting out.

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Quiz

Test Your Small Business Know-How

Question 2 of 10

Which one of these costs is deductible as a business expense?

A. Advertising
B. Business travel and entertainment
C. Employee Compensation
D. Home office
E. All of the Above

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Quiz

Test Your Small Business Know-How

Question 2 of 10

Which one of these costs is deductible as a business expense?

You're right!E. All of the Above is correct.

Sorry, wrong! is incorrect.

The right answer is E. All of the Above.

All of these business expenses are tax deductible as long as you adequately document their business use. But for home offices you can't deduct more than the amount of the income generated by the business. And only half of the cost of business-related meals and entertainment is deductible.

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Test Your Small Business Know-How

Question 3 of 10

All small businesses have to be incorporated.

A. True
B. False

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Quiz

Test Your Small Business Know-How

Question 3 of 10

All small businesses have to be incorporated.

You're right!B. False is correct.

Sorry, wrong! is incorrect.

The right answer is B. False.

While small businesses do not have to be incorporated, there can be financial benefits to declaring your business an LLC or a corporation.

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Test Your Small Business Know-How

Question 4 of 10

When you own your own business, you may pay more in taxes than if you were employed by someone else.

A. True
B. False

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Quiz

Test Your Small Business Know-How

Question 4 of 10

When you own your own business, you may pay more in taxes than if you were employed by someone else.

You're right!A. True is correct.

Sorry, wrong! is incorrect.

The right answer is A. True.

Employees pay 7.65% of their wages for Social Security and Medicare taxes and their employers kick in an equal amount. As an entrepreneur, you're responsible for paying both the employee and the employer share -- for a total of 15.3% of your self-employment income. So if you earn the same amount of money as you did working for someone else, you'll pay more in Social Security and Medicare taxes. At the same time, you may get to claim certain tax write-offs to lower your taxable income that payroll employees can't, and such deductions reduce both your income and Social Security and Medicare taxes. Still, such savings may not make up for the so-called self-employment tax you owe.

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Test Your Small Business Know-How

Question 5 of 10

It's just me and five employees at my company. Does Obamacare mean I'm going to have to cover their health insurance?

A. Yes
B. No

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Quiz

Test Your Small Business Know-How

Question 5 of 10

It's just me and five employees at my company. Does Obamacare mean I'm going to have to cover their health insurance?

You're right!B. No is correct.

Sorry, wrong! is incorrect.

The right answer is B. No.

Firms with fewer than 50 employees don't have to offer health care. But you might want to — and there will be programs offered that could reduce the cost by allowing small employers to pool their costs. Check out the the SHOP Marketplace at Healthcare.gov.

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Quiz

Test Your Small Business Know-How

Question 6 of 10

You can start a business out of your home.

A. True
B. False

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Quiz

Test Your Small Business Know-How

Question 6 of 10

You can start a business out of your home.

You're right!A. True is correct.

Sorry, wrong! is incorrect.

The right answer is A. True.

You may have to first obtain proper work and/or zoning permits. Such permits will allow for increased foot traffic and mail volume to your home, for example. Check at both your local and state level business associations.

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Quiz

Test Your Small Business Know-How

Question 7 of 10

If you need a small-business loan, try approaching:

A. Your local credit union.
B. Your community bank.
C. Friends and relatives.
D. Any of the above.

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Test Your Small Business Know-How

Question 7 of 10

If you need a small-business loan, try approaching:

You're right!D. Any of the above. is correct.

Sorry, wrong! is incorrect.

The right answer is D. Any of the above..

Looking for seed money? In general, credit unions and community banks provide friendlier terms than the big banks. If you have deep-pocketed family members or friends, be clear about when (and whether) you'll be able to pay it back. Put it in writing.

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Quiz

Test Your Small Business Know-How

Question 8 of 10

If you have employees, you need an employer ID number.

A. True
B. False

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Quiz

Test Your Small Business Know-How

Question 8 of 10

If you have employees, you need an employer ID number.

You're right!A. True is correct.

Sorry, wrong! is incorrect.

The right answer is A. True.

A business owner who has employees must have an EIN to be recognized as a business. An EIN also acts as a tax identification number for depositing payroll taxes and filing income taxes to the IRS.

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Test Your Small Business Know-How

Question 9 of 10

As a small-business owner, you're allowed to save as much for retirement as you would have at a corporate job.

A. True
B. False

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Quiz

Test Your Small Business Know-How

Question 9 of 10

As a small-business owner, you're allowed to save as much for retirement as you would have at a corporate job.

You're right!A. True is correct.

Sorry, wrong! is incorrect.

The right answer is A. True.

Believe it or not, you may actually be able to save more with a solo 401(k) than you could to a regular 401(k) because you can contribute both the employer's and the employee's share — in 2014, you can contribute $17,500 plus up to 20% of your net self-employed income, with a maximum of $51,000.

Another perk of the solo 401(k): You can borrow up to half of your balance (up to $50,000) if you need money. The calculators at www.401khelpcenter.com are a good resource to determine the best retirement plan for you.

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Test Your Small Business Know-How

Question 10 of 10

Most auto-related expenses are tax deductible for small businesses.

A. Yes
B. No.

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Quiz

Test Your Small Business Know-How

Question 10 of 10

Most auto-related expenses are tax deductible for small businesses.

You're right!A. Yes is correct.

Sorry, wrong! is incorrect.

The right answer is A. Yes.

Charges for items such as gas, oil changes, insurance and preventive maintenance are tax deductible. You have two options: Choose the standard mileage rate of 56 cents per mile (in 2014) or deduct the actual expenses.

But be careful -- business use of a vehicle is a red flag for the IRS. Make sure you keep detailed mileage logs and precise calendar entries for the purpose of every road trip. Sloppy recordkeeping makes it easy for the service to disallow your deduction.

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Test Your Small Business Know-How

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